Welcome to the 2026 1st quarter results announcement conference call for Budweiser Brewing Company APAC Limited. Hosting the call today from Budweiser APAC is Mr. Yanjun Cheng, Chief Executive Officer and Co-Chair of the board, and Mr. Bernardo Novick, Chief Financial Officer. The results for the 3 months ended 31st of March, 2026, can be found in the press release published earlier today and available on the Hong Kong Stock Exchange and Budweiser APAC websites. Before proceeding, let me remind you that some of the information provided during this results call, including our answers to your questions on this call, may contain statements of future expectations and other forward-looking statements. These expectations are based on the management's current views and assumptions and involve known and unknown risks, uncertainties, and other factors beyond our control.
It is possible that Budweiser APAC actual results and financial condition may differ, possibly materially, from the anticipated results and the financial condition indicated in this forward-looking statement. Budweiser APAC is under no obligation to, and expressly disclaims any such obligation to, update the forward-looking statements as a result of new information, future events, or otherwise. For a discussion of some of the risks and important factors that could affect Budweiser APAC future results, see risk factors in the company's prospectus dated 18th September 2019, the 2025 annual report published, and any other documents that Budweiser APAC has made public. I would also like to remind everyone that the financial figures discussed today are provided in U.S. dollars, unless stated otherwise. The percentage changes that will be discussed during today's call are both organic and normalized in nature, and unless otherwise stated.
Percentage changes refer to comparisons with the 2025 full year. Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of Budweiser APAC's normal activities. As normalized figures are non-GAAP measures, the company disclosed the consolidated profit, EPS, EBIT, and EBITDA on a fully reported basis in the press release published earlier today. Further details of the 2026 first quarter results can also be found in the press release. It is now my pleasure to pass the time to YJ. Sir, you may begin.
Thank you, Ray, and good morning, everyone. Thank you for joining today's call. We enter 2026 with a clear focus on recovering volume through disciplined execution across our market. For Bud APAC, total volume returned to a positive growth, supported by continued strong momentum in India. In China, our increased investment shows signs of progress. With the quarter-over-quarter volume decline tightening further as we remain committed to our strategy for enhancing our in-home route to market, enriching our portfolio, and innovating behind our mega brand to rebuild momentum. In South Korea, we gain market share in both on-premise and in-home channels. Before we go over financial results, I wanted to take a moment to introduce Bernardo Novick, our new Chief Financial Officer, effective from April 1st this year.
Novick joined AB InBev group in 2009 through the global MBA program and has worked across various functions in multiple markets. He brings deep finance and global resource allocation expertise, having led projects, delivering savings and meaningful value creation. I'm pleased to welcome him to the Bud APAC team. Let me now hand over to Novick for a brief introduction.
Good morning, everyone. I am delighted to join the Bud APAC team. I would like to thank you, YJ, for your trust and invitation to join the team. I joined AB InBev 16 years ago and spent five years in finance roles, five years in commercial roles, and five years in innovation roles, where I led the corporate venture capital arm in New York. Most recently, I was responsible for our global capital allocation division, reporting to the global CFO. I hope I can bring this experience to grow Bud APAC business in a profitable way. I have already had the pleasure of meeting some of you joining the call today, and I look forward to meeting many more in the next weeks and months ahead. Let me share our financial results for the 1st quarter of 2026 in more detail.
In the first quarter, APAC volume returned to growth, even if it's just 0.1%, after many quarters driven by strong growth in India and a sequential improvement in the industry and our volumes in China, with volume decline narrowing quarter-over-quarter. This progress was driven by both enhanced execution as well as increased investments across channels and our portfolio, which added temporary pressure to our bottom line. We also maintained strong brand momentum in South Korea, despite a soft industry and a challenging comparable last year. In India, we continue to advance premiumization, delivering strong double-digit volume and revenue growth. In summary, for Bud APAC, total volumes increased by 0.1%. Revenue and revenue per hectoliter decreased by 0.7% and 0.8% respectively.
Normalized EBITDA decreased by 8.1%, while our normalized EBITDA margin contracted by 246 basis points. Now let me cover some of the highlights from each of our major markets. In China, volumes decreased by 1.5%, improving sequentially with a quarter-over-quarter decline continuing to narrow since the second half of 2025. Revenue and revenue per hectoliter decreased by 4% and 2.5% respectively, impacted by increased investment to support our wholesalers and activate our brands in the in-home and emerging channels. Normalized EBITDA decreased by 10.9%, impacted by our top line performance and increased investments. We continue to make progress in expanding our distribution in the in-home channel while increasing the distribution of our premium brands.
This premiumization is more clear in the online to offline or O2O channel, which grew strong double digits in the quarter. Now let me share with you some of the investments we are making on our brands through our marketing campaigns, as well as liquid and package innovations to better connect with our consumers across more occasions and increase sales momentum, particularly in the in-home channel. On Budweiser, we accelerated the national expansion of Budweiser Magnum, building on its strong consumer traction and sustained sales growth. In March, Budweiser Magnum launched an integrated nation one campaign anchored by a strategic partnership with global football icon Erling Haaland and the FIFA World Cup mega platform to drive geographic and channel expansion. Regarding our Harbin family, we introduced Harbin 1900, celebrating its brewing heritage as the birthplace of Chinese beer.
Positioned in the Core Plus Plus segment, which is the RMB 8-10 price range, this new innovation is a 100% pure malt classic lager, pairing distinctive vintage packaging with a rich, authentic taste. The launch reinforces Harbin's role in driving innovation and placing new bets in this growing and important Core Plus Plus segment. In South Korea, volumes decreased by low teens and revenue decreased by mid-single digits, mainly due to a challenging comparable in the first quarter of last year, driven by shipment phasing ahead of a price increase that, if you recall, was in April 2025. Revenue per hectoliter, on the other hand, increased by low single digits, also comparing with the first quarter last year before the price increase. This led to a normalized EBITDA decreasing by low teens.
Having said that, we maintain a good commercial momentum in both in-home and on-premise channels, and we foresee a recovery in the second quarter. India continues to grow and will play a bigger role in our footprint. Industry momentum continued in the first quarter, and we gained total market share. We delivered strong double-digit volume and revenue growth, led by a strong growth in our premium and super premium portfolio. We also continue to see momentum in the moderation agenda with states like Maharashtra and Karnataka introducing changes that decrease the current relative tax advantage of hard liquor versus beer. We see this as a step in the right direction and a sign that some states understand the importance of evolving towards an alcohol tax policies that are consistent with global policy standards, where high alcohol products are taxed higher than low alcohol products like beer.
With that, YJ and I are here to answer any questions that you might have.
Thank you. Ladies and gentlemen, the floor is now open for questions. Please press star one to ask a question. If you wish to cancel a request, press star two. In the interest of time, may we ask participants to limit themselves to two questions, and please ask one question at a time in both English and Mandarin. Our first question is coming from Xiaopo Wei from Citi. Please go ahead. Xiaopo, your line is on mute. Please go ahead.
Sorry.
Mr. Xiaopo.
Can you hear me now?
Xiaopo.
Can you hear me now?
Yes, we can hear you very well.
Hello. I'm sorry. I have two questions on China. I will ask one by one. The first one, in the past two years, we have seen a few senior management leadership changes in the company. Is there any achievement or breakthrough that the company would like to share with us with the new leadership? [Non-English content]
Xiaopo, I'm YJ, let me take this questions. Let me start in English, I may turn to Chinese if needed. The changes we have meaning happened first half year last year.
The reason for the changes is a kind of retention between either global or other zone between the region in China, and also between headquarter in China versus operation in the field in each sales region. The reason for that is to share some best practice and to further strengthen their strengths in each area or each function, and also learn each other best practice sharing. That's kind of a normal retention changes. To be able to share the more the answer to your question about the changes of the people. As I mentioned, in the earlier, we keep a consistent of our strategy, which is focus on portfolio, brand portfolio, which is meaning Harbin and Budweiser, and also focus on in-home and route to market. Third one is focus on execution. Those are the three strategy we set up early last year and we have no changes.
Also you see the progress we have been made as Novick just mentioned, quarter-over-quarter 1 decline, narrow quarter-by-quarter and see very good trends. Also we see the execution in each area make a huge improvement. We put a lot of effort to invest our brand and also further focus on the in-home channel that the channel changes switch and which is just our further opportunity in our operation. We see starting from second quarter last year and the fourth quarter last year and the first quarter this year, the trends getting improved time quarter-by-quarter. I think that's try to answer your question. Xiaopo Wei.
OK, thank you. Should I start the second question?
Yeah, go ahead.
The second question is about the channel inventory. As far as I can recall, the company in China start de-stocking the channel in 4Q 2024. It has been a few quarters of de-stocking, and I remember in the last quarter earnings call you mentioned that actually our China inventory actually was younger, lower versus historic level. We know that China is a very dynamic market and changing every daily basis. Were you foreseeing a future that the China channel inventory will be below historic level as a new norm?
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thank you for your question. You are right, we have been proactively take steps to adjust our inventory given the current business environment. [Non-English content]
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Thank you. Our next question's coming from Leaf Liu from Goldman Sachs. Please go ahead.
Thanks. Can you hear me?
Yes.
Hi, Yanjun Cheng. This is Leaf Liu from Goldman Sachs. Thanks a lot for the opportunity and welcome Novick for your first earnings call with Bud APAC. I have two questions. The first one is on China. Basically our ground check shows that there's been some volume recovery in the super premium segment, including Corona, Blue Girl, in the first quarter. How to look at the sustainability of this trend? How to comment on the on-trade consumption recovery so far, including any color on 2Q to date on the on-trade performance in China? I will translate to Mandarin by myself.
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Hi Leaf, [Non-English content] Let me take this question.
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[Non-English content] The second question is to our new CFO Novick. I would like to know what's the three key focus for you this year, would you please share with the investor on the call? Thank you so much.
Thank you, Leaf, nice to hear from you, and thanks for the question. Let me share the three priorities that me and my team will focus this year. The number 1 priority is growth, the main objective here is to stabilize the volumes in China. The second priority is to improve execution. The third priority is value creation. On the number one, the number one is consistent to the business strategy that YJ was describing. The main objective of the business is to grow volumes here, right?
In order to do that, we really need to stabilize volumes in China. The finance role to do that is increasing investments and making the investments more effective. I think it's important here when we manage to stabilize volumes in China, given our footprint in India and in Southeast Asia, we'll be able to reignite growth for the whole Budweiser APAC. Number two priority is execution. I think here finance has an important role collaborating with our commercial team in China to enable and upgrade our route to market model to help on this transition to more volume in the in-home channel. That's another important priority for us. The 3rd one is value creation. Here we are reviewing internal investment decisions, improving efficiencies, cost controls.
You know, one example here, for example, we are reviewing the unit economics of different packs to make decisions that can help us be more efficient with resource allocation. Ultimately, Leaf, we are here for growth, and that's our main priority for this year. Thank you very much for the question.
That's super clear. Thanks a lot, Novick. Thanks a lot, YJ.
Thank you.
Thank you. Our next question is coming from Elsie Sheng from CLSA. Please go ahead.
Thank you management for taking my question. Thank you, YJ, and also welcome, Novick. I have two questions. My first question is on China in-home development. Do you have any update or progress to share on the development of off-trade channel in China? I will translate myself. [Non-English content ] I will ask my second question later. [Non-English content]
Thank you, Elsie, this is YJ. Let me take this question. As the channel shift to in-home channel, we are taking actions to expand in the in-home channel to adapt. As we have a relative low exposure in in-home channel, which means we have a massive growth potential. [Non-English content]
[Non-English content]. Thank you. My second question is on China commercial investment. Previously management mentioned that will increase marketing this year. Is that plan still on track?
And what's the marketing plan for the coming peak season and sport event like World Cup? [Non-English content]
Yes. As you know, Novick mentioned, as I mentioned earlier, in 2026, our top priority in China is stabilize volume. To achieve this, we have given room to the team, to the commercial team to increase commercial investment.
So that's the direction we set up for the commercial team [Non-English content]
Thank you.
Thank you. Our next question is coming from Mavis Hui from DBS. Please, go ahead.
Hi management, thanks for taking my question. Thank you YJ and thanks Novick. My first question is on China. Could we have some more updates on the growth of your emerging channels, such as O2O instant retail and e-commerce in China. More importantly, how do margins and pricing dynamics across these channels compare with traditional off-trade? How are we managing potential channel conflict with our distributors?
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Thanks for your question. I will take this question as well. O2O is one of faster growth emerging channel in China. We have started to make a fair significant effort to increase our presence within. We see this as a great opportunity for us in 2026 and beyond.
We partner with major O2O platform to further expanded our penetration [Non-English content]
[Non-English content] Thank you. My second question is on Korea. Excluding shipment phasing effects, are we still seeing underlying share gains in South Korea? What are the key challenges to sustaining outperformance in the market? Thank you. [Non-English content] Thank you.
Thank you, let me take this question again. Total industry in Korea have been remained soft in the first quarter, 2026, with a soft consumer environment continued to impact overall alcohol consumption.
However, our underlying momentum in Korea continued, and we outperformed the industry in both the on-premise and in-home channel [Non-English content]
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Thank you.
Thank you. Our next question is coming from Anne Ling from Jefferies. Please go ahead.
Okay. Hi. Thank you. Thank you YJ, and thank you Novick. I have two questions here. First is on the cost of goods sold in general. We saw some like raw materials of price volatility, and this has been coming up recently. For example, like, you know, aluminum.
What will be our view on the raw material cost for year 2027? [Non-English content]
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Mm-hmm.
In 2026 first quarter, our cost per hectoliter has decreased by 0.8%, mainly driven by efficiency improvement, partially offset by commodity headwind. [Non-English content]
[Non-English content] My second question is on the India side. Could you share with us now on the India market update, how do we see the market, competition and our strategy over there? I understand that we are focusing on more on market share. May I know when the company will start focusing on the profitability of the market? Is it still a little bit too early, and that competition is still very keen? Should, I mean, should Carlsberg be listed, you know, what is your view on the competitive environment afterwards?
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Thank you. In India, we are focused on sustainable and meaningful top line growth that can translate to EBITDA and cash flow growth accordingly.[Non-English content]
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Thank you. Our next question is coming from Lillian Lo from Morgan Stanley. Please go ahead.
Thanks for the opportunity. Thank you YJ and Bernardo for the all the detail answer previously. Congrats to Bernardo for your new role.
I have two questions. The first one is on China pricing, cause YJ just mentioned that the raw material are fully hedged and were relatively stable. But on the pricing side, any price action and mix shift that you observe that could improve the overall pricing in the market in general. [Non-English content]
I can take this question, YJ.
Go ahead.
Hi, Lillian. Nice to hear from you. Thank you for the question. I think all the answers should start with the same reminder that our main priority, right, is growth, and particularly to stabilize the volumes in China. It's true that in the first quarter, our net revenue per hectoliter was below last year, and this was impacted by investment, mainly in three objectives for the investments, to support our wholesalers, to activate our brands, and also to accelerate the growth in O2O. On the other hand, we have positive mix effects coming from our brands, mainly driven by our premium, super premium brands.
I think it's important to mention to you and the rest that we expect to continue to invest in 2026. Regarding price, we will continue to monitor always the prices in the market, and we are open to adjustments if something changes. At this moment, we don't have any news regarding price increase for China. Thank you, Lillian, for the question.
Thanks a lot, Bernardo. My second question is on Korea, South Korea market. We all know that, last year, April, you had price increase and which still benefited the first Q this year on the pricing side. But what will drive the South Korea revenue and also pricing and the EBITDA growth for the rest of the year?
In particular, the industry remains a little bit soft and the competition is still there. This is the question on Korea. [Non-English content]
I can take this one, too.
Very good question, Lillian. Thanks. When we think about like a medium term margin growth for APAC East and Korea, I think there are mainly three things that can drive this. 1 is, of course, pricing, the 2nd one, operational efficiencies, and the 3rd one I think it's important to mention is mix and innovations. Maybe let me talk about each one of them. On prices, of course, we always consider our pricing decisions looking at what's happening in the beer market, but also the macroeconomic situation in the country. We'll continue to monitor, similar than China, we don't have anything to announce at this point. On the 2nd part, operational efficiencies. Here we continue to implement cost management initiatives. This is one of our main strengths at Budweiser APAC, as YJ was talking about our efficiency and excellence programs that we have.
This is something that we still see opportunities. Number three, I think, mix and premiumization and innovations are very important for us in the future. Maybe I can share a couple of examples. One of them is the growth of Stella Artois in the on-trade. I think that's a good and healthy growth. The other 1 is the non-alcoholic beer, like for example, Cass 0.0. I think both of them are good examples of innovations that can both drive volume growth, but also margin expansion. Overall, I think that, you know, we see opportunities to keep recovering margins in Korea in the future. Thank you for the question.
Thanks a lot, Bernardo.
Thank you. In the interest of time, our final questions will come from Linda Huang from Macquarie. Please go ahead.
Thank you very management for taking my questions. My first one is regarding for the dividends. Given that Bernardo has really taken up the CFO role, I just want to know that whether from the group perspective, whether you change the capital allocation approach, especially that last two years, right? We, they pay out $0.0566 per share dividend to the shareholders. Whether this the dividend per share policy under review?
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Thank you, Linda. Nice to hear from you. Thanks for the question. I think it's important to remind everybody, right, we are working to deliver sustainable long-term results for our shareholders, right? The other message is that our capital allocation strategy remains the same. Our first priority continues to be to invest in our business like we are doing this year, to drive organic growth, followed by M&A when we see opportunities for acquisitions, that's the second one. Then the third one to return to our shareholders, for example, via dividend. That is also what we have been doing, right? I think we are very proud of our dividend track record since the beginning.
Recently with the announcement of the $750 million dividend that we announced for 2025, which by the way, was consistent to the dividend for the previous 2024. I think if I have to summarize, we are working towards improving our business performance this year to be able to keep this consistency in the future. Thanks for the question.
Thank you very much. My second question regarding for our products, and I think this may be YJ, he can help. When we compare China to the other Western countries, I think there is always plenty of the room for alcohol product innovation. I just want to know that, can whether management can elaborate more about our product innovation plans, and then what kind of the innovation strategy will fit well for our China market.
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Thank you. That concludes our Q&A session today. I would like to turn the conference back over to YJ for the closing remarks.
Thank you. As I mentioned on our 2025 annual results call early this year, our priority is to stabilize volume and rebuild our market share momentum in China by investing in our in-home route to market and a leading premium portfolio. The progress we have been seeing in the first quarter and have been encouraging. On this positive note, thank you all for joining us today and I looking forward to speaking to you soon.
Thank you. This concludes today's results call. Please disconnect your line. Thank you.